Companies may soon be required to offer regular contracts to workers on zero-hours agreements after just three months, under proposed reforms being discussed by the Labour Government.

Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds informed business leaders and unions in a private meeting that new legislation could oblige employers to offer zero-hours staff a regular contract with guaranteed hours after 12 weeks. The move is part of Labour’s wider push to end “exploitative” employment practices, though details are still being finalised ahead of the unveiling of the employment rights bill next month.

The three-month threshold follows the example set by McDonald’s, which in 2017 gave staff the option to switch to contracts with minimum guaranteed hours. Most employees chose to remain on flexible terms, but the initiative has been cited as a model for balancing worker protections with business needs.

Sources involved in the discussions said opinions were split, with some business leaders suggesting a longer qualifying period and union representatives advocating for a shorter time frame. A Whitehall insider explained that the three-month proposal was designed to prompt clearer responses from businesses, with further details to be developed later.

Labour has pledged to clamp down on “one-sided flexibility” in the workplace. Proposals include requiring employers to compensate staff for late-notice shift cancellations, preventing workers from being financially disadvantaged when shifts are dropped last-minute. While Labour originally considered a full ban on zero-hours contracts, it has backed away from this after resistance from businesses, particularly in the hospitality and leisure sectors, which argue that the contracts offer valuable flexibility for both workers and employers.

The discussion over zero-hours contracts is part of Labour’s promise to deliver the largest overhaul of workers’ rights in decades. However, business leaders have expressed concern about the potential costs of the reforms. The Confederation of British Industry (CBI) reported that only 26 per cent of businesses feel confident they can absorb the financial impact without harming growth, investment, or jobs.

Tensions have also emerged within the Government over how to handle probation periods in the new system. Rayner is pushing for full employment rights from day one, after a short probation, while Reynolds reportedly favours a longer probation period, potentially lasting up to nine months.

The Government’s flagship employment rights bill is expected to be unveiled in the coming weeks, as ministers work to reconcile business concerns with their commitment to improving worker protections.

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Zero-hours contract crackdown: staff could be offered fixed hours after three months